Wednesday, 27 April 2011

Economic Fiction: Opportunity and Outward Effects

This week, we keep the focus on the character and define a bit more clearly what a choice needs to mean. Every time a character makes a choice, they give up the alternate. They can’t go left and right.

In economics, they call this opportunity cost. You lose your alternate options by picking one. This is important to fiction because your characters should be feeling the effects of the road less traveled. You should have them acutely aware of the option they gave up.

To recap:
People engage in purposeful behavior.
Our characters need goals; it makes them more ‘human.’

People have different personal values.
We need to understand our characters values in order to understand the decisions they should make.

People respond to incentives and disincentives.
All other things being equal what extra can be gained or what will be lost in exchange will affect the decision.

People make choices from alternatives.
By choosing one path, we lose access to the other.

So, you now have plenty of tools to loosely evaluate what choices your character will make. Now I want to examine one last principle that is more important to your plot than your character.

When a character makes a significant choice, it should have a resounding effect through your story world. This is absolutely essential to your antagonist, but your protagonist should also be having an effect on the world. In economics, we call these effects externalities, and they affect the kinds of choices other people make.

When the antagonist does something that makes it harder for your protagonist to reach his goals, we call this a negative externality. The opposite, when one person’s choice makes life easier for others’ lives easier is called a positive externality.

The key thing to remember is the outward reaching effects of choices. Who do they affect, why, and how?

So now, with some very basic economic principles in your tool kit, you should be able to give a little more life to your characters!


  1. Good last point. The characters have to affect things in some way.
    Nice series. Interesting take on character building.

  2. This is exemplified well in a book called "The House of Mirth" by Edith Wharton.

  3. I'll have to read that one, Rachel, just downloaded it to my kindle.

    KB: Thanks for the compliment, and the secondary effects is probably one of the most important parts of believable storytelling.